The EconomistAugust 31st 2019 BriefingHungary 212
1members read the opposition press. (He
was forced to resign within hours.) Despite
being tedious, though, kesmaand other
pro-government media account for more
than 80% of the news audience.
The production of news is managed,
too. Parliamentary rules require that the
government give notice of new bills and al-
low time for them to be debated, proce-
dures which can lead to public criticism,
even dissent. To avoid such problems, Fi-
desz often has minor mps table its bills,
rather than doing so itself, which allows
them to be rushed through in hours with
the opposition nowhere to be seen.To Viktor, the spoils
State-backed “public information” cam-
paigns shape public opinion in ways bene-
ficial to Fidesz. The National Communica-
tions Office, set up in 2014, co-ordinates
both the government’s advertising spend-
ing—which is directed almost exclusively
to friendly outlets, not critics—and its pub-
lic-information efforts. This has been
used, among other things, to build up an-
tipathy towards George Soros, a Hungar-
ian-American philanthropist. Although
his foundation provided a scholarship
which allowed Mr Orban to study in Oxford
in the late 1980s, Mr Soros has become an
appealing hate figure for Fidesz owing to
his liberal politics and wealth. His Jewish
background also plays a part. In 2017 the
government spent €40m ($45m) on two
nationwide surveys asking every citizen
whether they favoured an alleged immigra-
tion plan supposedly hatched by Mr So-
ros—in effect, a government-funded pro-
paganda effort. In the first three months of
2019 public-information spending reached
€48m, much of it for a billboard campaign
that accused Mr Soros of teaming up with
Jean-Claude Juncker, president of the Euro-
pean Commission, to promote migration.
When control of parliament, the legal
system and the media do not suffice, the
government has other tools. Before the
2018 general election, the biggest threat to
Fidesz came from Jobbik, originally a far-
right party. It had moved towards the cen-
tre in a bid to go mainstream, and at times
polled more than 25%. Enter the State Audit
Office, headed by a former Fidesz mpwho
enjoys an election-proof 12-year mandate.
In 2017 the audit office accused Jobbik of re-
ceiving illegal in-kind financing, and fined
it 663m forints ($2m). In 2019, in the run-up
to the European election, it tacked on an-
other 272m forints, leaving the party close
to insolvency. Two new liberal parties, Mo-
mentum and Dialogue for Hungary, as well
as the Socialists, Democratic Coalition and
the lmp(Green) party, were fined or inves-
tigated. Only Fidesz has been left un-
touched.
Some institutions have maintained
their independence, but Mr Orban’s gov-ernment seems intent on subverting them.
Over the past two years it has harassed the
Central European University (ceu), one of
the most respected institutions in the re-
gion, into leaving Budapest for Vienna. The
government insists that the clash stems
from a technical dispute over the ceu’s
awarding of American-recognised diplo-
mas, and not from the fact that its scholars
often criticise Fidesz, or that it was found-
ed and endowed by Mr Soros.
Most recently, the government went
after an organisation with a storied history:
the Hungarian Academy of Sciences,
launched in 1825 by Count Istvan Szeche-
nyi. The academy helped standardise the
Hungarian language, and played a key role
in the nationalist awakening that led to the
country’s emancipation from Habsburg
rule. Last year the government announced
that it wanted the academy’s 15 state-fund-
ed research institutes to be directly con-
trolled by the ministry of technology and
innovation. Negotiations went nowhere,
says Zsolt Boda, head of the academy’s so-
cial-science institute. The government
would show up with nothing on paper
about its plans, sticking instead to denia-
ble verbal statements. In July, parliament
simply pushed the new structure through.
The government says this brings things in
line with the way they are done elsewhere,
citing Germany’s Max Planck Institutes as
an example. Officials at the Max Planck In-
stitutes deny this, saying the Hungarian
structure gives the state direct influence
over scientists.
Despite its institutional advantages, Fi-
desz would not be able to stay in power if it
were not so popular. It secures that support
though its nationalist appeal and its pass-
able economic record.
Like other eastern Europeans, most
Hungarians saw the rejection of commu-
nism as a victory not so much of liberalism
or capitalism as of national identity. And
Hungary has a very strong sense of identity.
The population of 10m is ethnically ho-
mogenous. Fewer citizens can read and
write in a foreign language than in any oth-er eucountry, except Britain.
All of this made ethnic nationalism a
sound strategy for Fidesz. It deployed an
economic populism to match: an indige-
nous “Orbanomics” deemed superior to
the supposed globalist neoliberal consen-
sus. Mr Orban was elected shortly after the
financial crisis, when Hungary was in a bad
shape for which others were to blame. The
crisis-induced fall of the forint meant that
many Hungarians who had taken out low-
interest mortgages in Swiss francs could
not repay their debts. Mr Orban forced the
banks to redenominate the mortgages in
forints at favourable rates.
In 2011 Mr Orban pulled Hungary out of
talks on an imfrescue package initiated by
the previous government. After initially
slashing a public-works programme
launched by the Socialists, the government
doubled its budget starting in 2012, creat-
ing hundreds of thousands of jobs. At the
same time, it has introduced some relative-
ly radical policies, such as a flat income tax
of 15%. Growth and sober budgets have cut
the national debt from 80% of gdpin 2010
to 71% last year.
Orbanomics also fits neatly into the au-
thoritarian toolkit. Research by Gyorgy
Molnar of the Hungarian Science Academy
shows that in many villages with large
numbers of public-works jobs nearly all of
the votes go to Fidesz. In many cases, local
mayors use public-works employees (who
make less than the minimum wage) in
their own businesses.A new kind of feudalism
How well Orbanomics works as an eco-
nomic policy, as opposed to a means of
control, is open to question. Over the past
six years growth has averaged 3.5%, and
unemployment has fallen to 3.4%, which
sounds good. But every country in central
and eastern Europe has grown fast over the
past five years, and Romania, Slovakia, Po-
land and the Czech Republic have all out-
paced Hungary (see chart). Unemployment
is below 4% in most of the region. Hungary
is less productive than it could be, says An-
dras Vertes of gki, a consultancy in Buda-
pest, and growth is dependent on aid from
the eu, which amounts to some 2.5% of
gdp, among the highest in the club.
Much of the rest is down to German car-
makers, whose plants in Hungary account
for up to 35% of industrial exports. The gov-
ernment is very eager to keep them happy.
Last year, in one of Fidesz’s occasional po-
litical mistakes, the government passed
laws allowing companies to demand that
employees work longer overtime to be paid
for at a later date. Analysts say the so-called
slave law was a government effort to pla-
cate car companies worried about labour
shortages.
As the “slave law” shows, the govern-
ment pays less attention to the economicMiddling MagyarSources: Eurostat; European Commission *ForecastGDP, % change on a year earlier-9-6-303692008 10 12 14 16 18 19*Czech RepublicHungary
PolandRomaniaSlovakia